Understanding the Cycle of Market Emotions : Sentiment Analysis is the best way to trade Cryptocurrencies

The analysis of feelings is a useful trading tool

A good trader always takes into account the analysis of feelings. For all the automated tools, robots and indicators that have been developed over the years, the markets remain deeply irrational and diverted by human emotions. If enough investors expect the same thing, it will happen. Once a belief takes root, the feelings prevail over the technical aspects each time. Sentiment analysis is a useful trading tool.

Every good trader knows the effect that fundamental and technical analysis has on market movements. But the analysis of feelings that involves making decisions based on the emotions of other traders, is probably equally important, especially in the cryptocurrency market. Do not treat your emotions is one of the first rules a trader learns because he is hostage to all the feelings that accompany him: remorse; euphoria; discouragement is a recipe for disaster. But what about trading on the emotions of others? You could be a mechanistic trading automaton, with your emotions controlled, but the rest of the market is not, and it's their very irrational decisions that move the markets, not yours.

Technical, fundamental and sentimental analysis are disciplines that intersect. Even if you have not openly considered SA in your trading, it will have influenced your decisions.The analysis of sentiment is basically a self-fulfilling prophecy: if enough traders believe in X, then X becomes reality. There are coins like IOTA, which tends to go up in price every time someone publishes negative news about it, which is a common occurrence. An interpretation of IOTA's immunity is that its community stubbornly buys more during times of crisis as a gesture of defiance.

There are tools that provide a rough account of the overall sentiment of the market at a given time. An example is the Fear & Greed index which traces emotions and feelings from a series of aggregated sources. Right now, we are in fear, but it's still an improvement over the extreme fear of last month. Crypto Sentiment provides a more complete set of SA tools including a strategic bias index and an overconfidence index that "reflects the risk investors could take to risky positions based on the behavior of the bitcoin price.

Crypto Fear & Greed Index

Each day Fear & Greed Index analyze emotions and sentiments from different sources and crunch them into one simple number: The Fear & Greed Index for Bitcoin and other large cryptocurrencies. There is a daily absolute path and an always permalink for the latest status available. No JavaScript, no bullshit.

• Fear & Greed Index : https://alternative.me/crypto/fear-and-greed-index/

Crypto sentiment

Crypto sentiment publishs a regular sentiment report with highlights from the survey results. Beside a dedicated crypto sentiment report, an extented report for other financial assets will be provided too. Check the charts of different Bitcoin indicators Share your opinion on cryptocurrencies and profit from new information on cryptocurrency markets. Free of charge for participants in the survey.

• Crypto sentiment : https://www.crypto-sentiment.com/

Other People’s Feelings Matter